But France is catching up, partly thanks to its largesse in funding projects upfront.
To win the ProLogium solid-state battery plant, which is expected to involve a total investment of 5.2 billion euros and create 3,000 jobs over time, France offered incentives worth more than 1 billion euros ($1.1 billion), one source with knowledge of the deal told Reuters.
French officials and ProLogium executives declined to comment on the level of support as it is still pending European Commission approval and the final amount could differ.
For the 2.3-billion-euro plant opened by ACC (Automotive Cells Company) – the battery manufacturer involving Stellantis, Mercedes-Benz and French energy company TotalEnergies – France provided about 840 million euros in subsidies, including funds for research and development, according to the finance ministry.
ACC plans to build two similar plants in Germany and Italy, with the help of 437 million euros and 370 million euros in public funds respectively, according to the German and Italian governments.
Ola Kallenius, CEO of Mercedes, said it was taking a region by region approach to ensure EV batteries were made near its auto manufacturing plants around the world – so having gigafactories in Europe was inevitable.
“Now that you have additional economic incentives on top of that, it is something you have to take into your business case calculations, there is no doubt about that,” he told Reuters.
To roll out the public support France is using to entice battery makers, Macron lobbied Brussels to let EU member states match the kind of subsidies Washington is throwing at the EV industry under the IRA.
The EU agreed in February to loosen state aid rules, paving the way for France to unveil a green tax credit package, which can be worth up to 40 percent of a company’s capital investment in wind, solar, heat-pump and battery projects.
“The usual level of support to major industrial companies is around 10 to 15 percent. Here, it’s higher than usual,” said Marc Mortureux, head of the PFA French car lobby. “We are now at support levels in line with those of the US IRA.”
‘A charming guy’
Xavier Bertrand, head of the region home to the battery hub, told Reuters it could fast-track projects in less than half the time it takes other French regions as it gets all the necessary approvals done in parallel, rather than one after the other.
France is also making a cash incentive of up to 5,000 euros for buyers of new electric cars conditional on the manufacturers meeting tough low-carbon standards, effectively shutting out many non-European automakers using dirtier energy.
Still, the IRA almost threw ProLogium’s investment in France off course, one French presidential adviser told Reuters.
In April this year, Macron advisers and ProLogium held a crunch meeting in Paris after the company said it needed a “little extra” to convince its board to invest in France.
According to the adviser, what sealed the deal was a promise by Macron that he would attend the signing ceremony in person and give ProLogium a welcome publicity boost.
“Macron is a charming guy,” ProLogium’s Yang told Reuters, when asked about the French version of events. He added, though, that the cheap electricity from the nearby Gravelines nuclear power plant was just as important, if not more so.
French officials say the gigafactories are just one example of a country that is starting to open factories on its soil after two decades of offshoring to lower-cost sites – thanks to the government’s supply-side reforms.
Some opposition politicians say, however, that Macron is just exposing France to the whims of companies that are playing governments off each other to win more public money.
“Dunkirk has Chinese and Taiwanese investors,” Fabien Roussel, head of the French Communist Party told Reuters. “These shareholders can pull out for a number of reasons. What happens if the state has no guarantees or a share in the business?”